Case Study on How Uber Business Model and On Demand Services Disrupted the Traditional Business Industries

On-demand services because of its speed, comfort, and reliability has revolutionized the way we live. There is very little area untouched by technology and on-demand services which is a mix of technology and innovation has made our life a little less tensed and more peaceful. Earlier, conventional companies took a huge toll on our time and energy.

Also, these on-demand firms have created a new level of employment and entrepreneurship in this world. Semi-skilled and less-skilled workers who found it very difficult to get a job are pleased by the opportunity they get in on-demand services. More and more young people are actively launching their on-demand based startups. One of the main reason for this is, unlike other businesses, app-based startups are less cost-intensive and ownership percentage is less.

When saying about on-demand, one cannot leave Uber. Uber is the first of its kind company that disrupted the taxi industry. It is now operating in 300+ countries and completing 1.5 million rides per day worldwide. The model of Uber is so successful that many startups that came after Uber adopted its business model to emulate their success.

Now let us see how Uber enjoys this success and how it solved the most important problem.

Earlier, it was laborious for people to get a taxi. People have to wait for a long time and call a cab in the busy streets. In times of rain, wind, and snow, it is even more difficult. Even if they get a cab and complete the ride, only cash is accepted and the fare is known only at the end. All the above problems and many more were solved by Uber using a single mobile app.

Each stakeholder was provided with a mobile app. Booking a taxi, selecting the type of car, starting point, destination, fare calculation, and many more are done on the app given to the customer. On the other side, the driver in the vicinity accepts the ride in his app and comes to the rider’s place.

Apart from the mobile app, the overall business operation was also changed. Taxi is attached to the firm instead of operating own fleet. Yes, you heard it right. Uber operates millions of vehicles and none of it is owned by them. So, they don’t need to focus on vehicle maintenance and management.

Multiple payment options are also available in Uber. The driver commission is directly sent to the bank account.

In Uber, the drivers are their own bosses and can work at their own comfort. 20% of the Uber drivers are under 30. Many find it an exciting and good way to earn money.

The success of Uber can be better shown as a case study. Below are some of the points Uber did to disrupt the industry and opened a new market.

Uber is the first of its kind

Uber introduced the first ride-sharing concept to the world and captured a significant market share. Even after the advent of their competitors like Lyft, Ola, and Didi, they still dominated the market. Not to mention that they also had their share of problems with customers, drivers, and the city government.

Now Uber is releasing new services like Uberpool, Uber boats, Uber bikes, and many more. They are constantly innovating and creating new products to sustain in the market and also to dominate the market share.

Less ownership

Conventional taxi firms have to invest in taxis, driver salaries, fleet maintenance, and fuelling. This is almost nil for Uber. To be honest, Uber had a humble beginning at a small office in San Francisco and invested a very small amount in their startup. So, they cannot even think of pouring money on other areas.

Uber operates millions of cabs globally and none of them is owned by them. They showed the entrepreneurship community that a startup can be conceived with minimal investment.

Calculated scaling and adapting to change

Uber is operating in 65+ countries and in 300 cities globally. The type of operation is not common for them in all places. While scaling their operation, they took into account the region diversity, demographics, and emotions of the locals. This enabled them to get a grip over new markets in a short time.

Like said before, they adapted to the changing environment by rolling out innovative services. Region-specific services were also introduced.

The knack of problem-solving

Founder of Uber Travis Kalanick himself had faced the problem with booking a conventional taxi. Frustrated with it, he combined his knack of entrepreneurship with the existing problem to lay down Uber. He sensed that there is a huge reward for the solution to this problem.

Now, Uber is operating in many cities and it still dominates the business even after eight years. They are the first company to merge a conventional service with smartphones. They attribute their success to their way of solving a complex problem by incorporating the latest tech advancements.

Drivers are their own bosses

Uber allowed the drivers to have their own vehicle and work at their own comfort. The drivers can work part time or full time. This system created an opportunity for self-employment. Also, to register with Uber as a driver is easy. You just have to download the app and upload all the documents and licenses.

Uber is also providing incentives, bonuses, and insurances to retain the drivers. This kind of model attracted a lot of people into Uber.

Uber on other on-demand services

Enough said, Uber has not only disrupted the taxi industry but also revolutionized the way startups work. The less ownership model of Uber has prompted many others to adopt this to other services. Some of the services that use the Uber business model are restaurant food delivery, grocery delivery, healthcare service, education, entertainment, and many more.

Needless to say, all the above-said services badly needed some sort of innovation and Uber business model provided that. Most on-demand service companies are aimed at solving the common problem faced by customers.

As a result, other businesses are also getting disrupted now. Still, the other on-demand services have not achieved the heights of Uber but they are working very hard to improve every day.